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    MRK
    Earnings call· Sep 2025(Q3 FY25)

    Merck & Co., Inc. MRK

    Oct 30, 2025 Source

    Executive summary

    Merck & Co., Inc. Q3 FY25 — Strong Pipeline Advancements and New Product Launches

    Merck delivered solid Q3 FY25 performance, driven by oncology strength and new product launches, reinforcing confidence in its science-led strategy. The company is making significant investments in its robust pipeline, with approximately 80 Phase III trials underway, and is committed to disciplined business development to fuel future growth. Discussions with the US administration on healthcare policy are ongoing, with an optimistic outlook for constructive outcomes.

    Highlights

    5

    • Total company revenues increased 4% (3% ex-FX) to $17.3 billion in Q3 FY25.

    • KEYTRUDA sales grew 8% to $8.1 billion, driven by metastatic and earlier-stage indications.

    • WELIREG sales increased 41% to $196 million, predominantly from advanced renal cell carcinoma.

    • WINREVAIR continued strong momentum with global sales of $360 million, with ~1,500 new US patients.

    • Animal Health business delivered strong growth, with sales increasing 7%.

    Concerns

    5

    • GARDASIL sales decreased 25% to $1.7 billion, primarily due to lower sales in Japan and macro factors in the US adolescent segment.

    • VAXNEUVANCE sales decreased 7% due to a competitor preferential recommendation in Japan.

    • KEYTRUDA US Q4 FY25 growth expected to be negatively impacted by ~$200 million due to timing of wholesaler purchases.

    • FY25 EPS guidance midpoint of $8.96 includes a negative impact of $0.04 related to the Verona acquisition.

    • Expected headwinds in FY26 from DIFICID and BRIDION loss of exclusivity, and IRA price setting/generic entrant for JANUVIA.

    Guidance & targets

    10
    CategoryTargetConfidence
    Full-year 2025 Revenue (non-GAAP)
    $64.5 billion to $65 billion
    high materiality
    High
    Full-year 2025 Gross Margin (non-GAAP)
    approximately 82%
    medium materiality
    High
    Full-year 2025 Operating Expenses (non-GAAP)
    $25.9 billion and $26.4 billion
    medium materiality
    High
    Full-year 2025 Other Expense
    $400 million and $500 million
    low materiality
    High
    Full-year 2025 Tax Rate (non-GAAP)
    14% and 15%
    medium materiality
    High
    Full-year 2025 Shares Outstanding
    approximately 2.51 billion
    low materiality
    High
    Full-year 2025 EPS (non-GAAP)
    $8.93 to $8.98
    high materiality
    High
    KEYTRUDA QLEX Patient Adoption
    30% to 40%
    high materiality
    High
    OHTUVAYRE Investment
    more than $0.5 billion
    medium materiality
    High
    Pipeline Revenue Opportunity
    over $50 billion
    high materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Total Company
    Total company revenues increased 4% or 3% excluding the impact of foreign exchange.
    		$17.3B4%——
    Oncology
    Growth driven by strong demand from metastatic indications and robust uptake in earlier-stage cancers, including cervical, breast, and endometrial cancers. Increased use of KEYTRUDA in combination with Padcev in urothelial cancer. US growth benefited by ~$100M from an extra Tuesday of shipments. WELIREG growth predominantly from increased use in advanced renal cell carcinoma in the US and international launches.
    KEYTRUDA sales: $8.1BKEYTRUDA growth: 8%WELIREG sales: $196MWELIREG growth: 41%
    		$8.1B8%——
    Vaccines
    GARDASIL decline primarily due to lower sales in Japan (reimbursement expiration) and lower adolescent segment vaccinations in the US, partially offset by US growth from price and CDC purchasing. CAPVAXIVE driven by demand from retail pharmacies and non-retail customers, and seasonal inventory build. VAXNEUVANCE decline due to competitor recommendation in Japan, US sales flat. ENFLONSIA sales reflect initial stocking ahead of expected demand.
    GARDASIL sales: $1.7BGARDASIL growth: -25%GARDASIL ex-China growth: -3%GARDASIL US growth: 13%CAPVAXIVE sales: $244MVAXNEUVANCE sales: decreased 7%ENFLONSIA sales: $79M
    		————
    Cardiovascular
    WINREVAIR continued strong momentum. US sales had an approximate $40M negative impact from timing of distributor purchases, which reversed in October. Progress with approvals and reimbursement outside the US, including a good start in Japan.
    WINREVAIR sales: $360MWINREVAIR new US patients: ~1,500WINREVAIR total US prescriptions: >24,000
    		$360M———
    Animal Health
    Livestock sales grew due to higher demand across all species and timing of sales. Companion animal sales declined due to reduction in vet visits and competition in parasiticides, partially offset by price, improved supply, and new product launches.
    Livestock sales growth: 14%Companion animal sales growth: -3%
    		—7%——

    Operational metrics

    13
    Revenue Growth (ex-FX)
    3%
    Q3 FY25
    Gross Margin (non-GAAP)
    81.9%up 1.4 percentage points YoY
    Q3 FY25
    Operating Expenses (non-GAAP)
    $6.6Bdecreased
    Q3 FY25

    Excluding $300 million in business development charges, operating expenses were flat, reflecting increased investments offset by timing of expenses.

    Business Development Charges
    $300Mvs $2.2B a year ago
    Q3 FY25
    Other Expense
    $106M
    Q3 FY25
    Tax Rate (non-GAAP)
    13.4%
    Q3 FY25
    EPS (non-GAAP)
    $2.58
    Q3 FY25
    Share Repurchases
    $5B
    FY25

    Expected for the full year 2025.

    Dividend Policy
    increasing over time
    ongoing

    Committed to dividend, with the goal of increasing it over time.

    KEYTRUDA Early-Stage Sales Contribution
    over half
    Q3 FY25

    Early-stage indications are driving over half of KEYTRUDA's growth and now exceed 25% of total sales in FY25.

    Domestic Manufacturing and R&D Investment
    $70B
    ongoing

    Part of a broader plan to strengthen the US as a global leader in biopharmaceutical innovation.

    Phase III Trials Underway
    approximately 80
    Q3 FY25

    Across a diverse array of therapeutic areas.

    New Product Launch Opportunities
    more than 20
    future

    These programs will transform the commercial portfolio and fuel future growth.

    Industry KPIs

    10
    MetricValueDetails
    Peak sales guidanceover $50 billionUSD
    Prescription volume>24,000prescriptions
    EPS revenue guidanceFY25 Revenue: $64.5B-$65B; FY25 EPS: $8.93-$8.98USD
    Pricing policy impact—
    Pipeline clinical milestonesapproximately 80trials
    Regulatory approvals filingsFDA approval, CHMP positive opinion
    Price volume mix decomposition13%%
    Geographic regional revenue growth13%%
    Clinical trial efficacy safety data76% reduction%
    Business development capacity deal appetite$1B to $15B rangeUSD

    Deals & partnerships

    2
    Verona PharmaStrategic acquisition to add OHTUVAYRE, a novel, first-in-class maintenance treatment for chronic obstructive pulmonary disease.

    Completed in October. Provides another important growth driver with multibillion-dollar commercial potential into the next decade. Merck plans more than $0.5 billion investment in 2026 to maximize OHTUVAYRE's potential.

    KoselugoRestructured agreement for Koselugo.

    The restructured agreement for Koselugo contributed a positive impact to the updated FY25 EPS guidance.

    Risks & headwinds

    9
    Foreign Exchange Impact on RevenueFY25

    negative impact of approximately 0.5%

    Tariff Impact on Gross MarginFY25

    less than $100 million

    KEYTRUDA US Wholesaler Purchase TimingQ4 FY25

    negative impact of approximately $200 million

    Loss of Exclusivity (LOE) and Generic EntrantsFY26

    DIFICID LOE mid-2025 (US), BRIDION LOE partway through 2026, JANUVIA generic entrant mid-2026

    Mitigation: New product launches and pipeline advancements are expected to offset these headwinds.

    IRA Price SettingFY26

    impact on JANUVIA family

    Mitigation: New product launches and pipeline advancements are expected to offset these headwinds.

    GARDASIL Sales Decline (Japan)Q3 FY25

    lower sales due to expiration of reimbursement for catch-up cohort

    Mitigation: Focus on private market growth in mid-adult segment (age 27-45) and activating broad age cohorts globally.

    GARDASIL Sales Decline (US Adolescent Segment)Q3 FY25

    lower level in the adolescent segment

    Mitigation: Impacted by reduction in eligible population and macro factors; hopeful for growth but dependent on ACIP recommendation changes.

    VAXNEUVANCE Competitive PressureQ3 FY25

    decreased 7%

    Mitigation: Competitor preferential recommendation in Japan more than offset growth in certain international markets.

    Companion Animal Sales DeclineQ3 FY25

    declined 3%

    Mitigation: Due to reduction in vet visits and competition in parasiticides, partially offset by price, improved supply and new product launches.

    What to watch in Q4 FY25

    5

    KEYTRUDA QLEX Adoption Rate

    next 6 months (due to J-code)
    Currentearly in launch, slower initial uptake expected
    Targetprogress towards 30-40% adoption

    Why it matters

    Successful adoption of the subcutaneous formulation is key to extending KEYTRUDA's lifecycle and maintaining market share against future competition.

    I would highlight, as we pointed out in the past, that we will have permanent J-code, but we won't get that probably for 6 months. And during that first 6-month window, you can anticipate a slower uptick just because with people using temporary J-codes, there can be longer reimbursement windows and so some people will hesitate to order until they have the permanent J-code.

    Q&A highlights

    6

    What is Merck's updated framing on BD targets, especially given the Verona deal, and views on potential transformative larger transactions in the industry?

    Merck is actively looking for BD opportunities, primarily in the $1 billion to $15 billion range, but is open to larger deals if science and value align. The focus is on pipeline assets across all phases, not synergy-driven transformative acquisitions, which are seen as disruptive to the existing robust pipeline.

    “We do not think that a transformative acquisition, a synergy-driven deal, is something that we need to do nor aligns with our future because as you know, we have one of the most robust pipelines we've ever had and we see large synergy-driven deals as disruptive to that activity.”

    asked by Asad Haider · answered by Robert Davis

    2 min read6 chapters

    Detailed Narrative

    01

    Pipeline Strength and Future Growth Drivers

    Merck's pipeline is described as its strongest and deepest in recent memory, with approximately 80 Phase III trials underway across diverse therapeutic areas including cardio-pulmonary, immunology, HIV, ophthalmology, and oncology. The company is investing behind more than 20 compelling launch opportunities, which are projected to generate over $50 billion in revenue by the mid-2030s. This robust pipeline is expected to transform the commercial portfolio and fuel future growth.

    02

    Strategic Business Development Focus

    The company remains committed to disciplined, science- and value-driven business development to augment its expansive pipeline. Management is assessing potential targets with urgency, primarily focusing on the $1 billion to $15 billion range, but is open to larger deals if science and value align. The focus is on bringing in pipeline assets across all phases (Phase I to commercial opportunities), rather than synergy-driven transformative acquisitions which are viewed as disruptive.

    03

    Oncology Portfolio Expansion

    Merck continues to expand its oncology portfolio beyond KEYTRUDA. Recent advancements include the FDA approval and positive CHMP opinion for subcutaneous pembrolizumab (KEYTRUDA QLEX), offering a quicker administration time. The company also announced positive Phase III results for WELIREG in combination with KEYTRUDA and Lenvima for adjuvant and advanced renal cell carcinoma, further diversifying its oncology offerings. Data from antibody-drug conjugates (ADCs) like sac-TMT and R-DXd were also presented at ESMO.

    04

    Cardiovascular and Pulmonary Advancements

    Significant progress was made in cardiovascular and pulmonary programs. Enlicitide, an investigational oral PCSK9 inhibitor, met all primary and key secondary endpoints in the CORALreef Lipids study, demonstrating significant LDL cholesterol reduction. WINREVAIR, for pulmonary arterial hypertension, showed a 76% reduction in clinical worsening events in the HYPERION trial, leading to an expanded FDA label based on the ZENITH trial results. The acquisition of Verona Pharma adds OHTUVAYRE for COPD maintenance treatment.

    05

    Vaccines and Infectious Disease Updates

    In vaccines, CAPVAXIVE received Japanese approval and its sBLA for children/adolescents was accepted by the FDA. ENFLONSIA, for RSV prevention in infants, received a positive CHMP opinion and saw initial stocking ahead of demand. In HIV, new Phase III data for doravirine and islatravir as a once-daily oral regimen, and Phase II outcomes data for once-weekly oral islatravir with lenacapavir, were presented, highlighting ongoing development in treatment and PrEP settings.

    06

    US Healthcare Policy and Manufacturing Investments

    Merck is actively engaged with the US administration on healthcare policy, aligning with goals to decrease patient out-of-pocket costs and achieve fair value for medicines globally. The company is optimistic about constructive outcomes that preserve investment in breakthrough innovations. Merck also announced plans to invest over $70 billion in expanded domestic manufacturing and R&D, including a groundbreaking event at its Elkton, Virginia site, to strengthen US biopharmaceutical innovation.

    AI-generated summary of the company’s earnings call. Not investment advice.